“There’s a couple of twists to this new story. The first is that no mortgage pro calls these loans “subprime” anymore. Now, everyone calls them, ahem, “non-prime.””
The New Subprime Meltdown
I’ll always remember one of my early firsthand exposures to the housing bust.
Still a financial journalist back then, I had a photographer with me on a visit to Cape Coral, Florida. For a brief time, the southwest Florida suburb was the poster child for the whole sorry debacle.
It wasn’t hard to find what we were looking for.
We stopped in front of one home. The weeds, knee-high and withered in the heat, crunched under our feet. Plastic toys littered a side yard. The front door was wide open. Whoever had lived there loaded up the stove and refrigerator and left in a big hurry.
Another family’s financial tragedy. Another subprime mortgage gone belly-up.
Investment banks once competed to package these questionable loans into “AAA” rated bonds. But as “subprime” grew ever more infamous, Wall Street’s assembly line of subprime mortgage-backed securities quietly ground to a halt.
That is, until very recently…
After an eight-year hiatus, Wall Street is once again mashing together subprime mortgage loans as RMBS — residential mortgage-backed securities — and selling them to yield-hungry bond buyers.